his article is intended will be encountered. These can be
for the information of divided into direct and indirect
persons who are neither taxes:
domiciled in the United Kingdom
nor resident there for tax Indirect taxes
purposes and who intend to
acquire property for personal Stamp duty
occupation.
Stamp duty is levied on the
United Kingdom, and particularly purchase price at rates, which
London, property has for many range from 1% for a property
years been a popular mode of costing £125,000, to 4% where the
investment for foreign investors purchase price exceeds £500,000.
and indeed, at one recent time,
it was estimated that some 60% of Council tax
London residential property was
owned by offshore companies. This tax is levied by the Local
London real estate has also Authority. The rate is set
performed well in investment annually and depends on the
terms. locality, the size of the
property and its value.
There are no restrictions on the
ownership of real estate in the Direct taxes
United Kingdom by non-residents
and, other than the matters which The United Kingdom levies three
influence the choice of the main forms of direct taxation:
property itself, perhaps the most
important factor to be taken into • Income tax - This tax will not
account is the impact of the apply to an owner occupier.
various forms of taxation which • Capital gains tax - Non
–residents are exempt from the value of gifts of U.K. assets
capital gains tax in respect of in the seven years preceding
property held only as an death.
investment.
• Inheritance tax - For which any If the property is purchased in
investor holding assets in the the name of the individual there
United Kingdom is potentially can be no doubt that its value
liable. Fortunately it is avoided will be assessed for inheritance
easily by the purchaser who has a tax purposes on his death. If
foreign domicile. however it is purchased in the
name of an offshore company, the
Inheritance tax planning investor does not own an asset in
the U.K, but the shares in a
Where the value of chargeable foreign company, which, in his
assets passing on death exceeds circumstances are not chargeable
£285,000 the excess over that with inheritance tax. If the
figure is taxed at 40%. This company is incorporated in a
threshold will increase to tax-free jurisdiction, such as
£300,000 for the year 2007/8, the British Virgin Islands, the
£312,000 for 2008/9 and £325,000 final result will be that the
for 2009/10. Where the investor property passes tax free to the
had a foreign domicile, only U.K. heirs.
property is taken into account in
the calculation and it may be Ref: CO240406
necessary to take into account
About the Author:
Chesterfield provide offshore trust consultancy, management and administrative services covering offshore company and trust formation and offshore partnerships and management for trading, investment holding, asset management and estate and tax planning. For more information on these services and buying a property in the UK visit http://www.chesterfield-offshore.com
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Chesterfield Offshore
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